I agree in your natural evolution of the industry theory. But I would like to point out a few things here.
1. Japan ate the U.S. TV companies'lunch because they offered cheaper TVs, they focused volume production. (So, in that sense, yes, we are seeing a parallel now in terms of the natural evolution of the industry.)
2. But Japan was able to hang onto its victory a bit longer because Japan innovated LCD, plasma TV technologies (including design and production technologies)
3. What was totally unexpected for the Japanese vendors is that in the digital era, the barrier to entry to the value added products (like digital TVs, smart TVs, etc.) is very low. Anyone with a good piece of software (licensable) and a solid SoC (smart TV SoC) can become a "smart TV" very quickly.
So, on the flat panel TV front, Japan lost twice. She lost in the volume war; and she also lost in the value-added TV business.

So, really, what's surprising is that despite the leading position Japanese TV companies had commanded with their flat panel display technologies (they spent a lot of resources in advanced technology development and not to mention in mass production technology), all the first mover advantages now seem gone as they are struggling to keep up with the Korean giants' volume.

Sorry if the article is confusing to you. By "flat TV," we include all the flat panel TVs -- everything from LCD, Plasma to LED back-light TV and OLED. Japanese TV companies stopped offering CRT TVs more than several years ago.

Sony has good brand image in India compared to Sharp and Panasonic. Sony can beat Samsung if their pricing is equal or lesser with 2 to 3 year warranty. That is the only way to increase the volume of sales.

What do we mean by Flat TV here? Does it include LCD and LED back-light TVs? If it does not then the market of the CRT based TVs is going to be lost day by day there is nothing strange about it. From the article it is very confusing to figure out which TV is being discussed at different stages.

At one time the names like Sony and Panasonic meant prime products , here in India. In the last decade this scenario has changed. It is only LG and Samsung everywhere.
So it is bye bye Japan and welcome korea as far consumer electronic products and white goods are concerned

Having worked for one of the Big Three, I would say that the main problem is that there were not able to make TV evolve enough.
The fact the needs for LCD was also driven by the move from analog to digital broadcast. 5 years I saw the same TV set in a store in Tokyo and in Paris. The one in Tokyo was using newly introduced full HD channel, whereas in Paris it was still analog. With such a poor quality nobody wants to pay twice the price. So the problem was not the TV set, but the contents (not talking about how lame are the shows...). In Japan the move to digital created a needs for new TV. It was the same in the US or in Europe, but with some time-lag. During that time the technology became common and Japanese company had to cut prices.
After digital broadcast something new is required. Up to last year, there were planning on 3D to create a new move, but it seems it will not happen.
I think that TV makers where not able to do what Apple did with the iPod: provide the hardware and the content.
For TV, streaming has been a big competitor. Why buy a TV if you can have the same thing + extra on your computer.
For the Big Three (and others) the next move is to rethink TV, not a box displaying broadcast content, but as an extension to the content they do provide themselves.

What makes a market worth being in in the first place?
If it's a market addressed by your industry, it's worth it if you can make enough money addressing it. What "enough money" is will depend upon who you are, what you do, what your business model is and what your financials look like.
"Unless you can leverage the LARGE scale of economy to the extent Samsung made it possible" is a key factor. TVs have become a commodity product, with commodity pricing and paper thin margins. It's what I was talking about earlier in product life cycles, where it's the end of an inevitable progression in consumer electronics, and when to *exit* a market you're in is an important question. Samsung and Foxconn are structured to do commodity manufacturing and make money, by selling enormous volumes. Sony apparently isn't.
But while the TV business may indeed *not* be worth saving, what does Sony do *instead?* If they decide it's not worth saving, how do they get out? It sounds like TV is a large enough part of Sony's business they they may simply not be *able* to say "We are out of the TV business." How many plants would be closed? How many workers would be laid off? What sort of a loss would Sony have to take close down that part of the company, and could they afford it? What would the resulting company look like?
I can think of various reasons why Sony couldn't just say "We're out!" tomorrow, including corporate ego, the costs of exiting the market, and unhappiness on the part of the Japanese government.
If I were Sony, I'd try to do two things: wind down the TV business and shift production to outsourced partners, and try to make the TVs I *still* made higher end products I could charge a higher price for. I wouldn't expect to *make* money, but I'd be trying to *lose* less.
But my ultimate question would still be "What is the Next Big Thing that will be my bread and butter, the way TV *used* to be?"
If I don't have an answer for that question, I'm in trouble.

I appreciate the margin discussion above. But with all due respect, I think what we should be looking at here is whether TV business is worth the effort of saving -- for any sane companies these days. Unless you can leverage the LARGE scale of economy to the extent Samsung made it possible, adding features and differentiations to TVs wouldn't seem to do the trick.
The days when TV was the focal point of many people's lives seem to be long gone. Added values and more differentiations will make more sense in smart phones and tablets...
Most consumers don't buy flat TVs because it's 3D or Google TV. It's because...well...it's cheap!

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